Lukas Moodysson's first feature, Fucking Amal or Show Me Love, won lots of hearts with its comic yet swooningly fervent study of a smalltown girl-on-girl love affair. His new feature is a brilliant expansion of film-making scope, despite being conceived on the same domestic, suburban lines. It is an almost perfect light comedy: funny, original, touchingly tender, with superbly managed modulations of tone between laughs and tears.

Together is about a commune in Sweden in 1975, occupied by a bunch of hippies who give their children names like Tet, after the Tet Offensive. They are wearing those special 1970s jumpers, and carrying the woollen shoulder bags that, as Martin Amis once wrote, appear to have been woven out of snot. Their merry utopia is called Tillsammans or Together - that is how they solemnly answer the phone - and it has its very own horrific VW camper van with an appalling mural-type decoration. When two of its inhabitants defect to the rival "Mother Earth" commune, a similar VW van arrives to pick them up with its own mother earth logo and hippie imagery.

Tensions escalate when the commune's bearded and saintly leader Goran, played by Gustaf Hammarsten, persuades the overcrowded community to accept his sister Elisabeth (Lisa Lindgren), a battered wife with a bruised face, a split lip and two children.

Apart from the use of Abba's SOS on the soundtrack, permissible given the setting, there are no stock cliches to denote the period. It's not about the wacky music or clothes, but about the more depressing real life of the 1970s: the instantly familiar atmosphere of wearied political idealism - from which Moodysson conjures gentle and compassionate human comedy.

A keynote scene takes place in the kitchen where the Together commune bicker ferociously about whose turn it is to do the washing up, and whether or not washing up is bourgeois anyway. One complains about the behaviour of Together's lesbian member, Anna (Jessica Liedberg), and we pull back to see that Anna is naked from the waist down. "I have a fungal infection," she complains righteously, showing what look like very 1970s Alex Comfort pubes: not waxed or trimmed but luxuriously foliant. Anna's ex-partner Lasse (Ola Norell) belligerently insists on the right to show his genitals and pulls down his trousers and pants, as Goran nervously ushers in Elisabeth and her children to introduce them to their new housemates, just in time to see Lasse's unlovely flaccid penis.

It is a very funny scene, and one which cleverly introduces a key issue of the time for the forces of reaction: does hippyism with its yearning for a child-like state of innocence, actually corrupt real children with drugs and sexual incontinence? (The prosecution of Oz magazine, for example, strategically focused on the Kids' Issue.) The children in Together are a great joy; little Tet plays make-believe games of "Pinochet" with Elisabeth's son Stefan: it means taking turns to torture each other with pretend electrodes while shouting: "Do you love Pinochet?" - "No! No!" But Stefan brings into the house forbidden commercial fripperies like Lego. Tet says sadly that his father offered to whittle him two blocks of Lego from wood - an unimaginable cruelty, worthy of a Viz comic Liberal Parent.

Moodysson keeps his story moving with the perpetual motion of churning sexual anxiety: Anna's adoration of Elisabeth, the anguish of Klas, played by Shanti Roney, and his gay obsession with Lasse, Goran's agonised "open" relationship with Lena (Anja Lundqvist) - who fancies the humourless radical Erik (Olle Sarri), who in turn only gives her an orgasm on condition that they discuss Marxist-Leninist theory afterwards. It is a seething pot which comes to the boil when Lena unsuccessfully attempts to seduce a 14-year-old boy from a "normal" household next door, a tricky scene which Moodysson brings off very adroitly. Throughout, Moodysson conveys the fact that the children are not corrupted - but, natural conservatives that they are, they furiously resent the lack of proper TV, toys, meat etc.

In counterpoint to this uproarious drama and comedy, Moodysson brings out the desperate loneliness of Rolf, the abusive but penitent husband left behind - a terrific performance from Michael Nyqvist. He is a plumber, who is continually being called out on spurious jobs by Birger, played by Sten Ljunggren, just to have someone to have a chat with - another sad case of a man whose wife has left him and whose life is in a mess.

What prevents Moodysson's commune from being simply a sitcom (and incidentally makes it more interesting than the icily facetious caricature in Lars Von Trier's The Idiots) is the warmth and sympathy with which everyone is conceived. He makes communal living look absurd, conceited, more than a little squalid, and riven with what its grown-up children would decades later call political correctness.

But its "togetherness", however chaotic, finally looks like an answer to loneliness, and an alternative of sorts to the un- acknowledged unhappiness of much conventional family life. At its best it was a form of extended family in itself, and Moodysson is generous enough - and sentimental enough - to see it at its best. Were people really like that? Did they really worry about revolution and the washing up? Did they really behave like that? Perhaps they did.